Madhya Pradesh High Court
Rajkumar Tamotia vs Alok Sharma on 22 May, 2024
1
IN THE HIGH COURT OF MADHYA PRADESH
AT G WA L I O R
BEFORE
HON'BLE SHRI JUSTICE VINAY SARAF
ARBITRATION CASE No. 48 of 2024
BETWEEN:-
RAJKUMAR TAMOTIA S/O LATE SHRI
1.
PRAKASH CHAND TAMOTIA, AGED
ABOUT 57 YEARS, OCCUPATION:
BUSINESS R/O 6, MUNSHIPURI, GOLE KA
MANDIR , MURAR GWALIOR (MADHYA
PRADESH)
SMT ANJANA TAMOTIA W/O SHRI
2.
RAJKUMAR TAMOTIA, AGED ABOUT 54
YEARS, OCCUPATION: BUSINESS R/O 6
MUNSHIPURI GOLE KA MANDIR MORAR
GWALIOR (MADHYA PRADESH)
.....PETITIONER
(SHRI CHETAN KANUNGO - ADVOCATE)
AND
ALOK SHARMA S/O LATE SHRI KEDAR
NATH SHARMA ADDRESS 1 ST FLOOR,
ACHALESHWAR MANSION, LALITPUR
COLONY LASHKAR GWALIOR M.P.
(MADHYA PRADESH)
.....RESPONDENTS
(SHRI SAMEER KUMAR SHRIVASTAVA - ADVOCATE FOR
RESPONDENT
..........................................................................................................................
Reserved on : 14.05.2024
Delivered on : 22.05.2024
........................................................................................................
This petition having been heard and reserved for orders
2
coming on for pronouncement this day, delivered the following:-
ORDER
1. Present application is preferred by applicants under Section 11 of the Arbitration and Conciliation Act, 1996 (in short, "Act 1996") for appointment of Arbitrator. The relief prayed for are as under:-
(1) Appointment of Shri Vinod Kumar Bhardwaj (Senior Advocate) as the arbitrator be set aside/annulled and the proceedings undertaken so far be declared to be void and non-est. (2) Appoint an impartial, independent, and neutral arbitrator to preside over the arbitral proceedings and resolve the disputes between the parties herein; (3) Any other relief, which this Hon'ble Court may deem fit and appropriate in the facts and circumstances of the case, may also be ordered; (4) Costs.
2. Brief facts of the case are that the applicants entered into an agreement with non-applicant on 12.09.2019 for the purpose of construction of complex. Clause 15 of the contract reads as under:-
15- ;g fd mHk; i{k ds e/; ;g Hkh r; gqvk gS fd bl vuqca/k i= dk mHk; i{k dMkbZ ls ikyu djsxs vkSj fdlh Hkh fookn dh n'kk esa e/;LFkrk gsrq Jh fouksn dqekj Hkkj}kt ofj"B vfHkHkk"kd dks fu;qDr fd;k tk;sxk rFkk muds }kjk fn;k x;k fu.kZ; mHk; i{k dks ekuuk gksxkA
3. As per the applicants, after the execution of the agreement between the parties for the purpose of construction and development of the property belongs to non-applicant, the applicants completed the construction of building/structure and 3 thereafter due to some dispute between the parties in February, 2024 the applicants received communication/notice dated 16.02.2024 issued by non-applicant and addressed to Shri Vinod Kumar Bhardwaj, Senior Advocate (sole Arbitrator) wherein it was stated that since dispute has arisen in context of agreement dated 12.09.2019, the matter is referred for the purpose of adjudication by sole Arbitrator nominated by the parties in the agreement itself. The applicants after receipt of the information regarding referring of the dispute to the sole named Arbitrator made a request to the non-applicant to discuss, negotiate and settle the alleged disputes amicably without the intervention of an Arbitrator or courts of law but the same was not accepted by the non-applicant and consequently applicants issued notice/communication dated 08.04.2024 once again requested to the non-applicant to resolve the dispute without intervention of third party and also objected regarding the appointment of Shri Vinod Kumar Bhardwaj, Senior Advocate as sole Arbitrator and requested the non-applicant to propose the name of an impartial and neutral arbitrator. The request of the applicants was not accepted by non-applicant and sole arbitrator has started the proceedings and appointed Shri Arun Vajpayee, Advocate as Advocate Commissioner for the purpose of inspection of the site in question and directed the parties to be present on the site on 21.04.2024.
4. The applicants have approached this Court with a request to set aside/annulled the proceedings undertaken by the sole arbitrator and appoint an impartial, independent and neutral arbitrator. The sole ground of challenge to the appointment of sole 4 arbitrator who was named in the contract is on the basis that non- applicant was having the professional relation with the sole arbitrator and, therefore, the sole arbitrator is ineligible to act as Arbitrator in view of the provisions of Section 12(5) read with 7 th Schedule of the Act, 1996.
5. Non-applicant opposed the prayer of the applicants by submitting the detailed reply wherein the execution of agreement is admitted. Issuance of communication dated 16.02.2024 is also admitted. Receipt of notice dated 8.4.2024 issued by the applicants and replied by non-applicant on 12.04.2024 are also admitted. However, it is submitted that sole arbitrator is not ineligible on account of professional ties and relationship between him and the non-applicant and the name of the sole arbitrator was accepted by the parties at the time of execution of agreement, therefore, the same amounts to waiving of the objection. It is further stated in the reply that the procedure for challenging the appointment of the arbitrator and termination of the mandate is prescribed in Section 12, 13, 14 of the Act,1996 and the issue cannot be agitate before this Court in the proceedings initiated under Section 11 of the Act of 1996. It is further stated in the reply that if the applicants are aggrieved by the appointment of the arbitrator and there are any justifiable ground to doubt the independence and impartiality of the arbitrator, applicants may raise this ground before the arbitrator himself and the arbitrator is empowered to decide the same under the provisions of Section 13 of the Act, 1996 and thereafter the decision of the arbitrator may be challenged before the Court under Section 34 of the Act. It is further stated in the reply that even in case the arbitrator has become ineligible due to 5 the relationship with the parties or counsel of the subject matter of the dispute falls under any of the categories specified in the 7 th Schedule, the remedy lies to the applicants are to approach to the competent court for termination of the mandate on the ground that the arbitrator has become de jure and unable to perform his functions and the same relief cannot be prayed before this Court under Section 11 of the Act. Non applicant prayed for dismissal of the application.
6. After considering the pleadings of the parties, it appears that the following issue is involved in the present application:-
Whether the High Court in exercise of its power under Section 11 of the Act, 1996 can set aside/annulled and the proceedings undertaken by the sole named arbitrator and appoint new arbitrator ?
7. Learned counsel for the applicants submits that the relationship between the non-applicant and the named arbitrator is admitted and there is no iota of doubt that the named arbitrator is ineligible to preside over the arbitration proceedings in view of the embargo stipulated under Section 12(5) of the Act read with 7 th Schedule and in such circumstances when the named Arbitrator is de jure ineligible to continue as the arbitrator, the proceedings undertaken by the arbitrator are void ab initio and the same be set aside/annulled and independent, impartial and neutral arbitrator be appointed. He further submits that the applicants are raising the issue mainly on the ground of ineligibility of the arbitrator under Section 12 (5) of the Act and, therefore, there is no need to approach to the Court for termination of the mandate as the same 6 is automatically terminated. He relied on the law laid down by the Apex Court in the case of Bharat Broadband Network Lt. vs. United Telecoms Ltd. (2019) 5 SCC 755 and para 17 and 18 reads as under:-
17.The scheme of Sections 12, 13 and 14, therefore, is that where an arbitrator makes a disclosure in writing which is likely to give justifiable doubts as to his independence or impartiality, the appointment of such arbitrator may be challenged under Sections 12(1) to 12(4) read with Section 13. However, where such person becomes "ineligible" to be appointed as an arbitrator, there is no question of challenge to such arbitrator, before such arbitrator. In such a case i.e. a case which falls under Section 12(5), Section 14(1)(a) of the Act gets attracted inasmuch as the arbitrator becomes, as a matter of law (i.e. de jure), unable to perform his functions under Section 12(5), being ineligible to be appointed as an arbitrator. This being so, his mandate automatically terminates, and he shall then be substituted by another arbitrator under Section 14(1) itself. It is only if a controversy occurs concerning whether he has become de jure unable to perform his functions as such, that a party has to apply to the Court to decide on the termination of the mandate, unless otherwise agreed by the parties. Thus, in all Section 12(5) cases, there is no challenge procedure to be availed of. If an arbitrator continues as such, being de jure unable to perform his functions, as he falls within any of the categories mentioned in Section 12(5), read with the Seventh Schedule, a party may apply to the Court, which will then decide on whether his mandate has terminated. Questions which may typically arise under Section 14 may be as to whether such person falls within any of the categories mentioned in the Seventh Schedule, or whether there is a waiver as provided in the proviso to Section 12(5) of the Act. As a matter of law, it is important to note that the proviso to Section 12(5) must be contrasted with Section 4 of the Act. Section 4 deals with cases of deemed waiver by conduct; whereas the proviso to Section 12(5) deals with waiver by express agreement in writing between the parties only if made subsequent to disputes having arisen between them.
18. On the facts of the present case, it is clear that the Managing Director of the appellant could not have acted as an arbitrator himself, being rendered ineligible to act as arbitrator under Item 5 of the Seventh Schedule, which reads as under:7
"Arbitrator's relationship with the parties or counsel ***
5. The arbitrator is a manager, director or part of the management, or has a similar controlling influence, in an affiliate of one of the parties if the affiliate is directly involved in the matters in dispute in the arbitration."
Whether such ineligible person could himself appoint another arbitrator was only made clear by this Court's judgment in TRF Ltd. [TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] on 3-7-2017, this Court holding that an appointment made by an ineligible person is itself void ab initio. Thus, it was only on 3-7-2017, that it became clear beyond doubt that the appointment of Shri Khan would be void ab initio. Since such appointment goes to "eligibility" i.e. to the root of the matter, it is obvious that Shri Khan's appointment would be void. There is no doubt in this case that disputes arose only after the introduction of Section 12(5) into the statute book, and Shri Khan was appointed long after 23-10-2015. The judgment in TRF Ltd. [TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] nowhere states that it will apply only prospectively i.e. the appointments that have been made of persons such as Shri Khan would be valid if made before the date of the judgment. Section 26 of the Amendment Act, 2015 makes it clear that the Amendment Act, 2015 shall apply in relation to arbitral proceedings commenced on or after 23-10- 2015. Indeed, the judgment itself set aside the order appointing the arbitrator, which was an order dated 27-1- 2016, by which the Managing Director of the respondent nominated a former Judge of this Court as sole arbitrator in terms of Clause 33(d) of the purchase order dated 10-5-2014. It will be noticed that the facts in the present case are somewhat similar. The APO itself is of the year 2014, whereas the appointment by the Managing Director is after the Amendment Act, 2015, just as in TRF Ltd. [TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] Considering that the appointment in TRF Ltd. [TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] of a retired Judge of this Court was set aside as being non est in law, the appointment of Shri Khan in the present case must follow suit."
8. The counsel further submits that as per Section 14(2) of the Act, the parties can apply to the Court, only in the event if there is 8 any controversy remaining with respect to the termination of mandate is concerned which is in the instant case is squarely covered by the admission of the non-applicant and by virtue of operation of law, there is no occasion to initiate such proceedings before the Court.
9. The counsel for the applicants further relied on the pronouncement of the Apex Court in the matter of TRF Limited vs. Energy Engineering Project Limited 2017 (8) SCC 377 which reads as under:-
32. Mr Sundaram, learned Senior Counsel for the appellant has also drawn inspiration from the judgment passed by the Designated Judge of this Court in Walter Bau AG [Walter Bau AG v. Municipal Corpn. of Greater Mumbai, (2015) 3 SCC 800 : (2015) 2 SCC (Civ) 450] , where the learned Judge, after referring to Antrix Corpn. Ltd. [Antrix Corpn. Ltd. v. Devas Multimedia (P) Ltd., (2014) 11 SCC 560 : (2014) 4 SCC (Civ) 147] , distinguished the same and also distinguished the authority in Pricol Ltd. v. Johnson Controls Enterprise Ltd. [Pricol Ltd. v. Johnson Controls Enterprise Ltd., (2015) 4 SCC 177 : (2015) 2 SCC (Cri) 530] and came to hold that :
(Walter Bau AG case [Walter Bau AG v. Municipal Corpn. of Greater Mumbai, (2015) 3 SCC 800 : (2015) 2 SCC (Civ) 450] , SCC p. 806, para 10)
"10. Unless the appointment of the arbitrator is ex facie valid and such appointment satisfies the Court exercising jurisdiction under Section 11(6) of the Arbitration Act, acceptance of such appointment as a fait accompli to debar the jurisdiction under Section 11(6) cannot be countenanced in law. ..."
33. We may immediately state that the opinion expressed in the aforesaid case is in consonance with the binding authorities we have referred to hereinbefore.
10. In case of Aravali Power Company Private Ltd. vs. Era Infra Engineering Ltd. (2017) 15 SCC 32, Apex Court has crystalized the guidelines in appointment of arbitrator after 9 amended Act under Arbitration and Conciliation Act has come into force. Relevant para 22B is quoted as under:
"22B. If the arbitration clause finds foul with the amended provisions, the appointment of the Arbitrator even if apparently in conformity with the arbitration clause in the agreement, would be illegal and thus the Court would be within its powers to appoint such arbitrator(s) as may be permissible."
11. The Apex Court in the case of Perkins Eastman Architects DPC vs. HSCC (India) Ltd. AIR 2020 SC 59 has held as under:
21. The further question that arises is whether the power can be exercised by this Court under Section 11 of the Act when the appointment of an arbitrator has already been made by the respondent and whether the appellant should be left to raise challenge at an appropriate stage in terms of remedies available in law. Similar controversy was gone into by a Designated Judge of this Court in Walter Bau AG [Walter Bau AG v. Municipal Corpn. of Greater Mumbai, (2015) 3 SCC 800 : (2015) 2 SCC (Civ) 450] and the discussion on the point was as under : (SCC pp. 805-06, paras 9-10) "9. While it is correct that in Antrix [Antrix Corpn.
Ltd. v. Devas Multimedia (P) Ltd., (2014) 11 SCC 560 :
(2014) 4 SCC (Civ) 147] and Pricol Ltd. [Pricol Ltd. v. Johnson Controls Enterprise Ltd., (2015) 4 SCC 177 : (2015) 2 SCC (Civ) 530] , it was opined by this Court that after appointment of an arbitrator is made, the remedy of the aggrieved party is not under Section 11(6) but such remedy lies elsewhere and under different provisions of the Arbitration Act (Sections 12 and 13), the context in which the aforesaid view was expressed cannot be lost sight of.
In Antrix [Antrix Corpn. Ltd. v. Devas Multimedia (P) Ltd., (2014) 11 SCC 560 : (2014) 4 SCC (Civ) 147] , appointment of the arbitrator, as per the ICC Rules, was as per the alternative procedure agreed upon, whereas in Pricol Ltd. [Pricol Ltd. v. Johnson Controls Enterprise Ltd., (2015) 4 SCC 177 : (2015) 2 SCC (Civ) 530] , the party which had filed the application under Section 11(6) of the Arbitration Act had already submitted to the jurisdiction of the arbitrator. In the present case, the situation is otherwise.
10. Unless the appointment of the arbitrator is ex facie valid and such appointment satisfies the Court exercising jurisdiction under Section 11(6) of the Arbitration Act, acceptance of such appointment as a fait accompli to debar 10 the jurisdiction under Section 11(6) cannot be countenanced in law. In the present case, the agreed upon procedure between the parties contemplated the appointment of the arbitrator by the second party within 30 days of receipt of a notice from the first party. While the decision in Datar Switchgears Ltd. [Datar Switchgears Ltd. v. Tata Finance Ltd., (2000) 8 SCC 151] may have introduced some flexibility in the time-frame agreed upon by the parties by extending it till a point of time anterior to the filing of the application under Section 11(6) of the Arbitration Act, it cannot be lost sight of that in the present case the appointment of Shri Justice A.D. Mane is clearly contrary to the provisions of the Rules governing the appointment of arbitrators by ICADR, which the parties had agreed to abide by in the matter of such appointment. The option given to the respondent Corporation to go beyond the panel submitted by ICADR and to appoint any person of its choice was clearly not in the contemplation of the parties. If that be so, obviously, the appointment of Shri Justice A.D. Mane is non est in law. Such an appointment, therefore, will not inhibit the exercise of jurisdiction by this Court under Section 11(6) of the Arbitration Act. It cannot, therefore, be held that the present proceeding is not maintainable in law. The appointment of Shri Justice A.D. Mane made beyond 30 days of the receipt of notice by the petitioner, though may appear to be in conformity with the law laid down in Datar Switchgears Ltd. [Datar Switchgears Ltd. v. Tata Finance Ltd., (2000) 8 SCC 151] , is clearly contrary to the agreed procedure which required the appointment made by the respondent Corporation to be from the panel submitted by ICADR. The said appointment, therefore, is clearly invalid in law."
22. It may be noted here that the aforesaid view of the Designated Judge in Walter Bau AG [Walter Bau AG v. Municipal Corpn. of Greater Mumbai, (2015) 3 SCC 800 : (2015) 2 SCC (Civ) 450] was pressed into service on behalf of the appellant in TRF Ltd. [TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377 :
(2017) 4 SCC (Civ) 72] and the opinion expressed by the Designated Judge was found to be in consonance with the binding authorities of this Court. It was observed : (TRF case [TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] , SCC p. 397, paras 32-33) "32. Mr Sundaram, learned Senior Counsel for the appellant has also drawn inspiration from the judgment passed by the Designated Judge of this Court in Walter Bau 11 AG [Walter Bau AG v. Municipal Corpn. of Greater Mumbai, (2015) 3 SCC 800 : (2015) 2 SCC (Civ) 450] , where the learned Judge, after referring to Antrix Corpn.
Ltd. [Antrix Corpn. Ltd. v. Devas Multimedia (P) Ltd., (2014) 11 SCC 560 : (2014) 4 SCC (Civ) 147] , distinguished the same and also distinguished the authority in Pricol Ltd. v. Johnson Controls Enterprise Ltd. [Pricol Ltd. v. Johnson Controls Enterprise Ltd., (2015) 4 SCC 177 : (2015) 2 SCC (Civ) 530] and came to hold that :
(Walter Bau AG case [Walter Bau AG v. Municipal Corpn. of Greater Mumbai, (2015) 3 SCC 800 : (2015) 2 SCC (Civ) 450] , SCC p. 806, para 10) '10. Unless the appointment of the arbitrator is ex facie valid and such appointment satisfies the Court exercising jurisdiction under Section 11(6) of the Arbitration Act, acceptance of such appointment as a fait accompli to debar the jurisdiction under Section 11(6) cannot be countenanced in law....'
33. We may immediately state that the opinion expressed in the aforesaid case is in consonance with the binding authorities we have referred to hereinbefore."
23. In TRF Ltd. [TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] , the Managing Director of the respondent had nominated a former Judge of this Court as sole arbitrator in terms of the aforesaid Clause 33(d), after which the appellant had preferred an application under Section 11(5) read with Section 11(6) of the Act. The plea was rejected by the High Court and the appeal therefrom on the issue whether the Managing Director could nominate an arbitrator was decided in favour of the appellant as stated hereinabove. As regards the issue about fresh appointment, this Court remanded the matter to the High Court for fresh consideration as is discernible from para 55 of the judgment. In the light of these authorities there is no hindrance in entertaining the instant application preferred by the applicants.
12. The Apex Court in the case of Jaipur Zila Dugdh Utpadak Sahkari Sangh Ltd. v. Ajay Sales & Suppliers, (2021) 17 SCC 248 has held as under:-
8.3 So far as the submission on behalf of the petitioners that the agreement was prior to the insertion of sub-section (5) of Section 12 read with the Seventh Schedule to the Act and therefore the disqualification under sub-section (5) of Section 12 read with the Seventh Schedule to the Act shall not be applicable 12 and that once an arbitrator Chairman started the arbitration proceedings thereafter the High Court is not justified in appointing an arbitrator are concerned the aforesaid has no substance and cannot be accepted in view of the decision of this Court in TRF Ltd. v. Energo Engg. Projects Ltd. [TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] ; Bharat Broadband Network Ltd. v. United Telecoms Ltd. [Bharat Broadband Network Ltd. v. United Telecoms Ltd., (2019) 5 SCC 755 : (2019) 3 SCC (Civ) 1] ; Voestalpine Schienen GmbH v. Delhi Metro Rail Corpn.
Ltd. [Voestalpine Schienen GmbH v. Delhi Metro Rail Corpn. Ltd., (2017) 4 SCC 665 : (2017) 2 SCC (Civ) 607] In the aforesaid decisions this Court had an occasion to consider in detail the object and purpose of insertion of sub-section (5) of Section 12 read with the Seventh Schedule to the Act.
10. It is further observed and held by this Court in Voestalpine Schienen GmbH [Voestalpine Schienen GmbH v. Delhi Metro Rail Corpn. Ltd., (2017) 4 SCC 665 : (2017) 2 SCC (Civ) 607] that independence and impartiality of the arbitrator are the hallmarks of any arbitration proceedings. Rule against bias is one of the fundamental principles of natural justice which apply to all judicial and quasi-judicial proceedings. It is further observed that it is for this reason that notwithstanding the fact that relationship between the parties, to the arbitration and the arbitrators themselves are contractual in nature and the source of an arbitrator's appointment is deduced from the agreement entered into between the parties, notwithstanding the same non- independence and non-impartiality of such arbitrator would render him ineligible to conduct the arbitration. It is further observed that the genesis behind this rationale is that even when an arbitrator is appointed in terms of contract and by the parties to the contract, he is independent of the parties.
18. Now so far as the submission on behalf of the petitioners that the respondents participated in the arbitration proceedings before the sole arbitrator -- the Chairman and therefore he ought not to have approached the High Court for appointment of the arbitrator under Section 11 is concerned, the same has also no substance. As held by this Court in Bharat Broadband Network Ltd. [Bharat Broadband Network Ltd. v. United Telecoms Ltd., (2019) 5 SCC 755 : (2019) 3 SCC (Civ) 1] there must be an "express agreement" in writing to satisfy the requirements of Section 12(5) proviso. In paras 15 & 20 it is observed and held as under : (SCC pp. 768 & 770-71) "15. Section 12(5), on the other hand, is a new provision which relates to the de jure inability of an arbitrator to act as 13 such. Under this provision, any prior agreement to the contrary is wiped out by the non obstante clause in Section 12(5) the moment any person whose relationship with the parties or the counsel or the subject-matter of the dispute falls under the Seventh Schedule. The sub-section then declares that such person shall be "ineligible" to be appointed as arbitrator. The only way in which this ineligibility can be removed is by the proviso, which again is a special provision which states that parties may, subsequent to disputes having arisen between them, waive the applicability of Section 12(5) by an express agreement in writing. What is clear, therefore, is that where, under any agreement between the parties, a person falls within any of the categories set out in the Seventh Schedule, he is, as a matter of law, ineligible to be appointed as an arbitrator. The only way in which this ineligibility can be removed, again, in law, is that parties may after disputes have arisen between them, waive the applicability of this sub-section by an "express agreement in writing". Obviously, the "express agreement in writing" has reference to a person who is interdicted by the Seventh Schedule, but who is stated by parties (after the disputes have arisen between them) to be a person in whom they have faith notwithstanding the fact that such person is interdicted by the Seventh Schedule.
***
20. This then brings us to the applicability of the proviso to Section 12(5) on the facts of this case. Unlike Section 4 of the Act which deals with deemed waiver of the right to object by conduct, the proviso to Section 12(5) will only apply if subsequent to disputes having arisen between the parties, the parties waive the applicability of sub-section (5) of Section 12 by an express agreement in writing. For this reason, the argument based on the analogy of Section 7 of the Act must also be rejected. Section 7 deals with arbitration agreements that must be in writing, and then explains that such agreements may be contained in documents which provide a record of such agreements. On the other hand, Section 12(5) refers to an "express agreement in writing". The expression "express agreement in writing" refers to an agreement made in words as opposed to an agreement which is to be inferred by conduct. Here, Section 9 of the Contract Act, 1872 becomes important. It states:
'9.Promises, express and implied.--Insofar as a proposal or acceptance of any promise is made in words, 14 the promise is said to be express. Insofar as such proposal or acceptance is made otherwise than in words, the promise is said to be implied.' It is thus necessary that there be an "express" agreement in writing. This agreement must be an agreement by which both parties, with full knowledge of the fact that Shri Khan is ineligible to be appointed as an arbitrator, still go ahead and say that they have full faith and confidence in him to continue as such. The facts of the present case disclose no such express agreement. The appointment letter which is relied upon by the High Court [Bharat Broadband Network Ltd. v. United Telecoms Ltd., 2017 SCC OnLine Del 11905] as indicating an express agreement on the facts of the case is dated 17-1-2017. On this date, the Managing Director of the appellant was certainly not aware that Shri Khan could not be appointed by him as Section 12(5) read with the Seventh Schedule only went to the invalidity of the appointment of the Managing Director himself as an arbitrator. Shri Khan's invalid appointment only became clear after the declaration of the law by the Supreme Court in TRF Ltd. [TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] which, as we have seen hereinabove, was only on 3-7-2017. After this date, far from there being an express agreement between the parties as to the validity of Shri Khan's appointment, the appellant filed an application on 7-10-2017 before the sole arbitrator, bringing the arbitrator's attention to the judgment in TRF Ltd. [TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] and asking him to declare that he has become de jure incapable of acting as an arbitrator. Equally, the fact that a statement of claim may have been filed before the arbitrator, would not mean that there is an express agreement in words which would make it clear that both parties wish Shri Khan to continue as arbitrator despite being ineligible to act as such. This being the case, the impugned judgment [Bharat Broadband Network Ltd. v. United Telecoms Ltd., 2017 SCC OnLine Del 11905] is not correct when it applies Section 4, Section 7, Section 12(4), Section 13(2) and Section 16(2) of the Act to the facts of the present case, and goes on to state that the appellant cannot be allowed to raise the issue of eligibility of an arbitrator, having itself appointed the arbitrator. The judgment under appeal is also incorrect in stating that there is an express waiver in writing from the fact that an appointment letter has been 15 issued by the appellant, and a statement of claim has been filed by the respondent before the arbitrator. The moment the appellant came to know that Shri Khan's appointment itself would be invalid, it filed an application before the sole arbitrator for termination of his mandate."
19. In view of the above and for the reasons stated above once the sole arbitrator Chairman is "ineligible" to act as an arbitrator to resolve the dispute between the parties in view of sub-section (5) of Section 12 read with the Seventh Schedule to the Act he loses mandate to continue as a sole arbitrator. Therefore, it cannot be said that the High Court has committed any error in appointing the arbitrator other than the sole arbitrator -- the Chairman as per Clause 13 of the agreement in exercise of powers, under Section 11 read with Section 14 of the Act.
13. The coordinate Bench of this Court in the case of M/s Om Sai RK Construction Pvt. Ltd. vs. M/s Forsight Infractech Pvt. Ltd has held as under:-
"27. Since the appointment of arbitrator at the instance of contractor is contrary to law and therefore, ineligible appointment deserves to be set aside and it can be removed at stage of passing of award (See : Haryana Space Application Centre and Others Vs. Pan India Consultants Pvt. Ltd., 2021 (3) SCC 103) and contention of the respondent is that applicant submitted the jurisdiction of the arbitrator is misplaced because applicant did not submit to jurisdiction of arbitrator and in fact informed the arbitrator about unilateral and invalid appointment process and proceedings were void ab initio.
28. In cumulatively case of the applicant succeeds and appointment of arbitrator at the instances of respondent/contractor hereby set aside and resultantly appointment and all proceedings 21 A.C.No.32/2021 undertaken by arbitrator is hereby set aside."
14. Counsel for the applicants on the strength of the above judicial pronouncements prayed for allowing the present petition.
15. Per contra, counsel for the non-applicant submits that in the agreement dated 12.09.2019 the period was fixed for the purpose of completion of the construction work as the same was not 16 completed within the period, the dispute was referred to the named arbitrator who is senior Advocate as per Clause 15 of the Agreement and the named arbitrator after receipt of the request of the non-applicant initiated the arbitration proceedings and appointed the Advocate Commissioner. However, the applicants instead of filing the objection before the named arbitrator approached this Court under Section 11 of the Act, 1996 with a prayer to set aside/annulled the arbitration proceedings and for appointment of new arbitrator. The counsel further submits that the applicants have raised the objections not only under Section 12(5) of the Act in the present petition but under Section 12(1) of the Act also and for that purpose it is essential to raise the same before the arbitrator and in case the objections are turned down by the arbitrator then the remedy is available to the applicants under Section 34 of the Act to challenge the order of the arbitrator. However, the applicants have approached this Court straightway without approaching the court.
16. Counsel for the non-applicant further submits that so far as the grounds of ineligibility of the sole arbitrator is concerned, the remedy lies under Section 14 of the Act and the applicants ought to have approached to the court for termination of the mandate. In the present application filed under Section 11 of the Act of 1996 the mandate can't be terminated. He further submits that in the agreement with the consent of the parties it was decided that in case of any dispute the matter shall be referred to the named arbitrator and, therefore, it will be deemed to be waiver of the objection by the applicants. He further submits that even in the judgment relied upon by the applicants delivered in the matter of 17 Bharat Broadband Network (supra) the Apex Court has held that for violation of Section 12(5) read with 7th Schedule of the Act a party is required to file application under Section 14 (2) of the Act before the Court. He further submits that judgment delivered in the matter of Jaipur Zila Dugdh Utpadak Sahkari Sangh (supra) the Apex Court has held that the agreement was executed between the parties prior to the insertion of sub Section (5) of Section 12 and 7th Schedule to the Act and under those circumstances the matter was decided. Therefore, the said judgment is also not applicable.
17. Learned counsel for the non-applicant relied on the judgment delivered by the Apex Court in the matter of HRD Corp. (Marcus Oil & Chemical Division vs. Gail, reported in 2018 12 SCC 471 wherein it is held as under:-
12. After the 2016 Amendment Act, a dichotomy is made by the Act between persons who become "ineligible" to be appointed as arbitrators, and persons about whom justifiable doubts exist as to their independence or impartiality. Since ineligibility goes to the root of the appointment, Section 12(5) read with the Seventh Schedule makes it clear that if the arbitrator falls in any one of the categories specified in the Seventh Schedule, he becomes "ineligible" to act as arbitrator. Once he becomes ineligible, it is clear that, under Section 14(1)(a), he then becomes de jure unable to perform his functions inasmuch as, in law, he is regarded as "ineligible". In order to determine whether an arbitrator is de jure unable to perform his functions, it is not necessary to go to the Arbitral Tribunal under Section 13. Since such a person would lack inherent jurisdiction to proceed any further, an application may be filed under Section 14(2) to the Court to decide on the termination of his/her mandate on this ground. As opposed to this, in a challenge where grounds stated in the Fifth Schedule are disclosed, which give rise to justifiable doubts as to the arbitrator's independence or impartiality, such doubts as to independence or impartiality have to be determined as a matter of fact in the facts of the particular challenge by the Arbitral Tribunal under Section 13. If a challenge is not 18 successful, and the Arbitral Tribunal decides that there are no justifiable doubts as to the independence or impartiality of the arbitrator/arbitrators, the Tribunal must then continue the arbitral proceedings under Section 13(4) and make an award. It is only after such award is made, that the party challenging the arbitrator's appointment on grounds contained in the Fifth Schedule may make an application for setting aside the arbitral award in accordance with Section 34 on the aforesaid grounds. It is clear, therefore, that any challenge contained in the Fifth Schedule against the appointment of Justice Doabia and Justice Lahoti cannot be gone into at this stage, but will be gone into only after the Arbitral Tribunal has given an award. Therefore, we express no opinion on items contained in the Fifth Schedule under which the appellant may challenge the appointment of either arbitrator. They will be free to do so only after an award is rendered by the Tribunal.
18. In Chennai Metro Rail Ltd. Administrative Building Vs. M/s. Transtonnelstroy Afcons (JV) & Anr. reported in 2023 SCC OnLine SC 1370 the Apex Court has held as under:
24. Returning to the present case, Section 12 (1) of the Act applies at the stage of appointment - which mandates disclosure requirements applicable to arbitrators; (a) sets out the kinds of influence which may lead to 'justifiable doubts' about 'independence and impartibility'; Section 12 (1)(b) sets out the disclosure requirement with respect to the arbitrator's ability to "devote sufficient time". Explanation (1) refers to the grounds of possible conflicts, which need disclosure : they are enumerated under separate heads under Section 34 of the Act, and grouped in seven broad categories in the Fifth Schedule to the Act. The second explanation to Section 12(1) requires disclosure in the form set out in the Sixth Schedule.
25. Section 12(2) requires disclosure of any event or circumstance which is mandatorily to be shared with the parties
- if such circumstances arise after the appointment. Section 12(3) lays out the grounds of challenge to an arbitrator if "justifiable doubts" exist in relation to his "independence or impartiality". Section 12(4) restricts challenge by parties - after appointment "only for reasons which he becomes aware after appointment is made".
26. Section 12(5) was inserted w.e.f. 23.10.2016; it begins with a non-obstante clause overriding any "prior agreement to the contrary" and stipulates that any person with any kind of 19 relationship set out in the Seventh Schedule (which outlines 19 specific heads and types of relationships - professional, familiar or associational) would be ineligible for appointment as arbitrator. The proviso to Section 12(5) enables the parties to waive the ineligibility conditions under Section 12(5) (read with Seventh Schedule) by express agreement in writing.
27. Section 13 (1) deals with the challenge procedure and enables parties to agree on a procedure to challenge the arbitrator. By Section 13(2), if there is no agreement, the party who intends to challenge the arbitrator has to within 15 days after becoming aware of the tribunal's constitution or within fifteen days after becoming aware of any circumstances referred to in Section 12(3) apply in writing to the reasons for challenge to a tribunal. Section 12(3), as noticed earlier, states that the grounds of challenge to existence of circumstances, giving rise to justifiable doubts about tribunal's independence or impartiality. Section 13(3) states that if the arbitrator does not withdraw or the other party does not in the absence of the other party agreeing according to the challenge; the tribunal has to decide upon it. By Section 13(4) if the challenge is unsuccessful the tribunal would continue with the proceedings and finalize its award. Section 13(5) states that any party can challenge the arbitrator's decision, after the award is made under Section 34.
Section 13(6) keeps open the issue of fee to be payable to the arbitrator in the event, the award is set aside on the ground under Section 13(5).
28. Section 14 deals with the contingency of failure or impossibility of the arbitrator or tribunal to act and stipulates that the mandate of an arbitrator shall terminate and he shall be substituted by another "if he becomes de jure or de facto unable to perform its functions or for other reasons fails to act without undue delay or withdraws from his office or parties agrees to the termination of his mandate". By Section 14(2) if a controversy remains, concerning the grounds referred to in Section 14 (1), the Court may be approached by the parties to decide upon the issue of termination on mandate.
29. Having regard to the above statutory position it would be necessary to consider the judgments cited. The first in this series would be Voestalpine Schienen GMBH v. Delhi Metro Rail Corporation Ltd.,19 where taking note of the amendment made to the Act in 2015, the Court underlined that it was with the objective to induce neutrality of arbitrators especially their independence and impartiality that the amendment act of 2015 20 was introduced. The amended provision was enacted to identify the circumstances that gave rise to justifiable doubts about the independence or impartiality of the arbitrator and in the event, any of those circumstances exist, the remedy provided is under Section 12. The court particularly underlined Section 12(5) which nullified prior agreements to the contrary. In the facts of that case, it was held that if an advisor had any past or present business relationship with a party, he was ineligible to act as arbitrator.
32. It is, therefore, evident that the rules for disqualification or ineligibility are fairly clear. The ineligibility which attaches to the appointment is the first category : it is contained in Section 12(1) read with the explanation and the Fifth Schedule to the Act. As recounted earlier this schedule has 34 items. In the event any of these circumstances exist, the appointment of the arbitrator is barred. The second category is where the arbitrator to start with is eligible but after appointment incurs any, or becomes subject, to any of the conditions, as enumerated in the Fifth Schedule. In that event, it is open to the party to claim that there could be justifiable doubts about his independence or impartiality. The remedy even then, would be that the party has to seek recourse and apply to the arbitrator in the first stance by virtue of Section 13(2). The wording of Section 13(2) clarifies that a party who intends to challenge the arbitrator, after becoming aware of certain circumstances which lead to justifiable doubts, that party has to within 15 days [of becoming aware] approach the tribunal and seek a ruling. In the event the party is not successful under Section 13(4), the tribunal is duty bound to continue with the proceedings. When the award is made, it can be subjected to challenge under Section 34, by operation of Section 13(5). Clearly, then the substantive grounds and the procedure applicable in relation to situations where justifiable reasons exist or arise, for questioning the eligibility of a tribunal to decide the reference are enumerated in Sections 12 and 13.
19. The Apex Court in the case of Swadesh Kumar Agarwal v. Dinesh Kumar Agarwal, (2022) 10 SCC 235 has held as under:-
6. Shri Divyakant Lahoti, learned counsel appearing on behalf of the appellant has strenuously submitted that in the facts and circumstances of the case the High Court has materially erred in terminating the mandate of the arbitrator under Section 14(1)(a) of the 1996 Act on an application filed under Section 11(6) of the 1996 Act.21
6.1. It is further submitted that in a case, where an arbitrator was already appointed by the parties themselves, subsequently, no application under Section 11(6) of the 1996 Act was maintainable either to terminate the mandate of the sole arbitrator and/or to substitute the arbitrator. 6.2. It is contended by Shri Lahoti, learned counsel that the mandate of the arbitrator can be terminated and/or may come to an end only as per the provisions of the Arbitration and Conciliation Act, 1996. Reliance is placed upon Sections 13, 14, 15, 25(a), 30 and 32 of the 1996 Act. It is submitted that other than the aforesaid provisions under the 1996 Act, there is no provision to terminate the mandate of the arbitrator. 6.3. It is submitted that in case of the eventualities mentioned in Section 14(1)(a) of the 1996 Act, the remedy available to the aggrieved party would be to approach the "court" as defined under Section 2(1)(e) of the 1996 Act.
6.4. Shri Lahoti, learned counsel appearing on behalf of the appellant further submitted that in the present case as such Respondents 1 and 3 herein parties to the arbitration proceedings, in fact, did submit the applications under Section 14(2) of the 1996 Act, which were pending before the court concerned at the time when the present applications under Section 11(6) of the 1996 Act was filed.
6.5. It is further urged that in fact, there is a difference and distinction between Section 11(5) and Section 11(6) of the 1996 Act.
6.6. That in the absence of any written contract containing the arbitration agreement, Section 11(6) of the 1996 Act shall not be applicable and therefore, an application under that provision shall not be maintainable.
6.7. That even otherwise, there was no undue delay in the arbitration proceedings on the part of the sole arbitrator which could have led to termination of his mandate that too, in exercise of powers under Section 11(5) and Section 11(6) of the 1996 Act.
6.8. It is further submitted by Shri Lahoti, learned counsel appearing on behalf of the appellant that as there was no undue delay on the part of the sole arbitrator therefore, Section 14(1)
(a) would not be attracted. Therefore, application under Section 14 of the 1996 Act was liable to be dismissed and the learned trial court ought to have allowed the application filed by the appellant, to reject the application under Section 14 of the 1996 Act in exercise of powers under Order 7 Rule 11CPC. It is submitted that the High Court committed a grave error in dismissing the writ petitions and confirming the order passed 22 by the learned trial court in dismissing the application under Order 7 Rule 11CPC.
6.9. Shri Lahoti, learned counsel appearing on behalf of the appellant heavily relied upon the decision of this Court in Antrix Corpn. Ltd. v. Devas Multimedia (P) Ltd. [Antrix Corpn. Ltd. v. Devas Multimedia (P) Ltd., (2014) 11 SCC 560 :
(2014) 4 SCC (Civ) 147] (paras 31 and 33) and the subsequent decision of this Court in S.P. Singla Constructions (P) Ltd. v. State of H.P. [S.P. Singla Constructions (P) Ltd. v. State of H.P., (2019) 2 SCC 488 : (2019) 1 SCC (Civ) 748] in support of his submissions that once the parties have invoked the arbitration proceedings and the arbitrator has been appointed, subsequent application under Section 11(6) of the 1996 Act shall not be maintainable.
20. Coordinate Bench of this Court in the case of Shivhare Road Lines vs. M/s. Container Corporation Of India Ltd. Reported in 2017 3 MPLJ 600 has held as under:-
5.1 A plain reading of section 12(3)(a) reflects that lack of independence and impartiality are the grounds on which appointment of an Arbitrator can be challenged. Since the parties to the Agreement have not agreed upon any procedure for challenging the Arbitrator appointed under the Agreement, sections 13(2),(3),(4) and (5) of the Act, 1996 would apply for challenging the mandate of the Arbitrator who has suffered loss of confidence on the ground of lack of independence and impartiality, for which a written objection is required to be sent by the aggrieved party to the arbitral tribunal. On receipt of the said objection, Arbitrator under section 13(3) either withdraws from his office voluntarily or on the basis of the consensus between the rival parties, failing which the arbitral tribunal is mandated by law to decide on the challenge.
5.2 In the instant case, the written objection P/13 has been considered and rejected by the Arbitrator vide P/16 on 8-12-
2015. In such a situation, the provisions of section 13(4) come into operation providing that in case of failure of the objection raised to the impartiality and independence of the Arbitrator, the Arbitrator is mandated by law to continue arbitral proceedings and proceed to render the arbitral award.
5.3 Thereafter the remedy available to the aggrieved party who raises an objection unsuccessfully is provided under section 13(5) which enables the aggrieved party to challenge the Award made under section 13(4) by praying for it's setting aside under 23 section 34 of the 1996 Act.
5.4 It is admitted at the bar that the arbitral proceedings have not yet terminated as the same are pending and an award by the Arbitrator as contemplated by section 13(4) has not been passed till date.
21. Counsel for the non-applicant submits that as no application was moved under Section 14(2) before the Court, arbitration proceedings cannot be set aside or annulled by this Court and therefore, the application is liable to be dismissed.
22. Considering the arguments advanced by the counsel for the parties and after perusal of the documents available on record it is not in dispute that the parties have entered into agreement on 12.09.2019 for the purpose of raising construction and development of the subjected land. It is also not is dispute that non-applicant referred the matter by invoking the arbitration Clause to the named sole arbitrator and after receipt of the information the applicants issued a notice wherein they sought consent of the non-applicant for appointment of any impartial unbiased eligible arbitrator and as the same was not accepted, the present application is filed.
23. The following provisions of the Act, 1996 are relevant for the purpose of deciding the present application which reads as under:
Section 2(1)(e) of the Arbitration And Conciliation Act, 1996
(e)[ "Court" means-
(i)in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a 24 suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes;
(ii)in the case of international commercial arbitration, the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court;] Section 4. Waiver of right to object.-A party who knows that-
(a)any provision of this Part from which the parties may derogate, or
(b)any requirement under the arbitration agreement,has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object.
Section 12. Grounds for challenge.- [(1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances,-
(a)such as the existence either direct or indirect, of any past or present relationship with or interest in any of the parties or in relation to the subject-matter in dispute, whether financial, business, professional or other kind, which is likely to give rise to justifiable doubts as to his independence or impartiality; and
(b)which are likely to affect his ability to devote sufficient time to the arbitration and in particular his ability to complete the entire arbitration within a period of twelve months.
Explanation 1. - The grounds stated in the Fifth Schedule shall guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence or impartiality of an arbitrator.
Explanation 2. - The disclosure shall be made by such person in the form specified in the Sixth Schedule.] (2)An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without delay, 25 disclose to the parties in writing any circumstances referred to in sub-section (1) unless they have already been informed of them by him.
(3)An arbitrator may be challenged only if.
(a)circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or
(b)he does not possess the qualifications agreed to by the parties.
(4)A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made.
(5)[ Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject-matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator:
Provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub- section by an express agreement in writing.] Section 13. Challenge procedure. (1)Subject to sub-section (4), the parties are free to agree on a procedure for challenging an arbitrator.
(2)Failing any agreement referred to in sub-section (1), a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section (3) of section 12, send a written statement of the reasons for the challenge to the arbitral tribunal.
(3)Unless the arbitrator challenged under sub-section (2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.
(4)If a challenge under any procedure agreed upon by the parties or under the procedure under sub-section (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award.
(5)Where an arbitral award is made under sub-section (4), the party challenging the arbitrator may make an application for setting aside such an arbitral award in 26 accordance with section 34.
(6)Where an arbitral award is set aside on an application made under sub-section (5), the Court may decide as to whether the arbitrator who is challenged is entitled to any fees.
Section 14. Failure or impossibility to act.- [(1) The mandate of an arbitrator shall terminate and he shall be substituted by another arbitrator, if']
(a)he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay; and
24. Applicants have challenged the appointment of named arbitrator on the ground that the arbitrator is having relationship with the non-applicant and non-applicant had worked in the office of the arbitrator as Junior Lawyer, therefore, the arbitrator is ineligible to be appointed as an arbitrator in view of the 7 th Schedule and his appointment is void ab initio. Present application is moved under Section 11 for appointment of arbitrator. Sole arbitrator has already initiated the proceedings and he has not withdrawn himself from the office of arbitrator, therefore, the issue of ineligibility is required to be decided by the court and the applicants may apply to the court which will then decide on whether his mandate is terminated or not. The Apex Court in the matter of Bharat Broadband (supra) after considering the report of law commission explained the scheme of Section 12, 13 and 14 and held that wherein arbitrator makes a disclosure in writing which is likely to give justifiable doubts as to his independence or impartiality, the appointment of such arbitrator may be challenged under Sections 12(1) to 12(4) read with Section 13. However, where such person becomes "ineligible" to be appointed as an arbitrator, there is no question of challenge to such arbitrator, 27 before such arbitrator. In such a case, i.e., a case which falls under Section 12(5), Section 14(1)(a) of the Act gets attracted inasmuch as the arbitrator becomes, as a matter of law (i.e., de jure) and unable to perform his functions under Section 12(5), being ineligible to be appointed as an arbitrator. This being so, his mandate automatically terminates, and he shall then be substituted by another arbitrator under Section 14(1) itself. It is only if a controversy occurs concerning whether he has become de jure unable to perform his functions as such, that a party has to apply to the Court to decide on the termination of the mandate, unless otherwise agreed by the parties. Thus, in all Section 12(5) cases, there is no challenge procedure to be availed of. If an arbitrator continues as such, being de jure unable to perform his functions, as he falls within any of the categories mentioned in Section 12(5), read with the Seventh Schedule, a party may apply to the Court, which will then decide on whether his mandate has terminated. Questions which may typically arise under Section 14 may be as to whether such person falls within any of the categories mentioned in the Seventh Schedule, or whether there is a waiver as provided in the proviso to Section 12(5) of the Act. As a matter of law, it is important to note that the proviso to Section 12(5) must be contrasted with Section 4 of the Act. Section 4 deals with cases of deemed waiver by conduct; whereas the provisons to Section 12(5) deals with waiver by express agreement in writing between the parties only if made subsequent to disputes having arisen between them.
25. In view of the above pronouncement of the Apex Court, there is no scope for setting aside or terminating the mandate of 28 arbitrator in an application filed under Section 11 of the Act, 1996 as in the present matter the arbitrator is continuing the proceedings and he has not withdrawn himself from the office of the arbitrator. Non-applicant has claimed that the arbitrator was named in the agreement even after knowing the fact that the non-applicant was having some professional relation with the sole arbitrator in the past, the same shall be treated as waiver. Under these circumstances, it is essential for the applicant to approach to the court which is a court defined under Section 2 (e) of the Act i.e. the principal Civil Court having original jurisdiction in the district as in Madhya Pradesh High Court is not having ordinary original civil jurisdiction and the court will decide the controversy occurs concerning whether the arbitrator has become de jure and unable to perform his functions or not and the court will decide the issue of termination of the mandate. This is not a case wherein the arbitrator was appointed by an authority who itself is ineligible, therefore, in the present matter the appointment of arbitrator cannot be treated as void ab initio. In the present matter, the parties have named the arbitrator by executing the agreement and, therefore, without termination of the mandate of the arbitration by the competent court new arbitrator cannot be appointed and this Court does not have jurisdiction to terminate the mandate of the arbitrator under Section 14 of the Act.
26. The judgment delivered by the Apex Court in the matter of Bharat Broadband (supra) has relied by the Apex Court in the matter of TRF Ltd. (supra), Aravali Power (supra), Perkins Eastman (supra), Jaipur Zila (supra) and by the coordinate Bench in the matter of Om Sai (Supra) and in none of the 29 judgments it is held that if the arbitrator has not withdrawn himself from the office of the arbitrator and there is a dispute in respect to the eligibility of the arbitrator, the same can be decided in a petition filed under Section 11 of the Act. In all the cases, the Apex Court has considered the fact that the arbitrator was appointed by the ineligible authority and, therefore, such arbitrator would render himself ineligible to conduct the arbitration. In none of the case relied by the applicants, the mandate of the named sole arbitrator was terminated in the proceedings arising out of application filed under Section 11 of the Act of 1996.
27. In a case when there is a dispute/controversy on the mandate of the arbitrator being terminated on the ground mentioned in Section 14 (1) (a) such a dispute has to be raised before the Court "defined under Section 2 (1) (e) of the Act, 1996"
and such a dispute cannot be decided on an application filed under Section 11 (6) of 1996.
28. In view of the above pronouncements of the Apex Court, the issue involved in the present matter is answered accordingly and consequently the application is disposed of with a liberty to the applicants to approach to the competent court for seeking termination of the mandate of the sole arbitrator and thereafter avail the remedy for appointment of arbitrator afresh.
29. With the aforesaid, the present petition is disposed of.
(VINAY SARAF) JUDGE van VANDANA VERMA 2024.05.22 19:42:41 +05'30'